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There are three types of taxes you can pay: income tax, inheritance tax and estate tax. Estate tax is levied on what you pass on after your death. These items can include cash, retirement accounts, property and more.

Estate taxes are different from and in addition to probate expenses, which can be avoided with a revocable living trust, and final income taxes, which must be paid on income you receive in the year you die.

It's official. For 2018, the estate and gift tax exemption is $5.6 million per individual, up from $5.49 million in 2017. That means an individual can leave $5.6 million to heirs and pay no federal estate or gift tax.

Taxable income is the amount of income used to calculate an individual's or a company's income tax due. Taxable income is generally described as gross income or adjusted gross income minus any deductions or exemptions allowed in that tax year.

First, estate taxes are due only on the portion of an estate's value that exceeds the exemption level; at the 2017 exemption level of $5.49 million, a $6 million estate would owe estate taxes on $510,000 at most.

The U.S. has the fourth highest estate or inheritance tax rate in the OECD at 40 percent; the world's highest rate, 55 percent, is in Japan, followed by South Korea(50 percent) and France (45 percent). Fifteen OECD countries levy no taxes on property passed to lineal heirs.